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Trading the news means positioning around scheduled economic releases such as NFP, CPI and FOMC decisions, when volatility and slippage spike. Most funded traders avoid the first one to five minutes, wait for direction to form, then trade the pullback with a smaller size and a wider stop.
Volatility is something every futures trader deals with, and if you trade in a prop firm environment, it becomes even more important to understand how to navigate these sharp swings. You have clear rules to follow, strict limits to respect, and a funded account to protect, so knowing how to trade around high-impact events can make a noticeable difference in your performance. When you learn how volatility behaves before, during, and after major market releases, you start reading the market with more confidence rather than guessing what could happen next. This helps you stay consistent, avoid unnecessary losses, and trade with a clearer plan.
Futures markets can move quickly for many different reasons, but some events consistently create larger price swings than others. Understanding what is behind the movement helps you prepare instead of reacting after the move has already happened.
Economic data is one of the biggest sources of volatility in futures markets. Reports such as Non-Farm Payrolls, Consumer Price Index data, and Federal Reserve decisions can cause sharp moves within seconds.
The reason is simple. Traders are constantly adjusting their expectations based on new information. When an economic release is significantly different from what the market expected, buying and selling activity can increase very quickly.
For a prop trading trader, this matters because a move that normally takes several minutes can happen in a matter of seconds during a major release.
Not every volatile move appears on an economic calendar. Geopolitical developments, unexpected policy decisions, central bank comments, or sudden changes in market sentiment can create similar conditions.
These events are harder to prepare for because you may not know when they will happen. This is why having predefined risk limits and avoiding oversized positions is important even during otherwise normal trading sessions.
Earnings announcements can also influence futures, particularly when a major company has a large impact on a particular sector or index.
For example, stronger or weaker earnings from a major technology company can influence sentiment across technology stocks and, in turn, affect equity index futures. Traders who understand these relationships can be more aware of why a market is suddenly moving instead of treating every price swing as a technical setup.
Volatility itself is not necessarily a problem. The bigger issue is how quickly conditions can change when you are trading under account rules and drawdown limits.
A position that looks reasonable during normal market conditions can become much riskier when volatility increases.
If the market moves several points in seconds, a position that was sized for normal conditions may lose more than expected before you have time to react. This is why your position size should reflect the market conditions rather than staying fixed throughout every session.
The goal is not to avoid every volatile move. It is to make sure one unexpected move does not put your account at unnecessary risk.
Also Read: How to Navigate Drawdown Limits
High-impact events can affect how quickly your orders are filled and where they are executed. Price can move between the moment you place an order and the moment it reaches the market.
This is where slippage becomes important. A stop placed at a particular level does not always mean the position will close at exactly that price during a fast market.
You need to account for this when planning your risk, especially around major releases.
Fast markets can make traders abandon their original plan.
A sudden move can create the temptation to enter late, increase position size, move a stop, or chase the market because you feel that you are missing an opportunity.
These decisions often have more to do with emotion than analysis. Having a clear plan before the event gives you something to follow when the market becomes difficult to read.
Also Read: 7 Reasons to Avoid Emotional Trading
Preparation is often more useful than trying to predict exactly what the market will do after a major release.
Start your trading day by checking the economic calendar for scheduled events.
Mark the releases that could have a meaningful effect on the futures market you trade. You do not need to predict the result. You simply need to know when the market may become more active.
If you trade an equity index future, for example, keep an eye on major economic releases and central bank events that could change market expectations quickly.
Position sizing is one of the simplest ways to manage increased volatility.
If you normally trade a particular size, consider reducing it when the market is approaching a major event. A smaller position gives you more room to handle a sharp move without putting the same amount of capital at risk.
You do not need to make every trade smaller. The key is recognising when the market conditions justify a change.
Before the release, identify the important levels on your chart and decide what you will do under different conditions.
For example:
What happens if price breaks above resistance?
What happens if price breaks below support?
What will you do if the first move reverses?
Where will you exit if the setup becomes invalid?
Having these answers before the event helps you avoid making decisions in the middle of a fast move.
When the release arrives, the first move is often the most difficult part to trade. Price can move sharply in one direction and then reverse just as quickly.
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The first few minutes after a major release can be extremely fast.
Instead of immediately entering because the price is moving, consider waiting for the initial reaction to settle. This gives the market some time to show whether the move has real follow-through or whether it was simply a short-term reaction.
Missing the first move is not necessarily a problem. There will often be another setup once the market starts forming structure.
After the initial volatility settles, look for clearer signs of direction.
You might see the price break a key level, hold above it, and then retest the area. You could also see a failed breakout followed by a move in the opposite direction.
The important point is to avoid assuming that the first large candle tells you everything. Let price action develop before deciding whether there is a trade worth taking.
Higher volatility can mean that normal stop distances become too tight.
If you decide that a wider stop is appropriate for the setup, reduce your position size so that your overall risk remains controlled. A wider stop with the same position size can expose your account to much larger losses.
Think about your total risk first, then work backwards to determine the position size and stop placement.
Once the initial reaction has passed, the market often becomes easier to analyse.
After a major release, look at how price behaves around important levels.
If price breaks a level and continues holding above it, you may have a continuation setup. If price breaks the level and quickly moves back below it, that can point toward a failed breakout or reversal.
Do not focus only on the size of the candle. Pay attention to what price does after the initial move.
Just because volatility has started to decrease does not mean you need to immediately return to your usual position size.
Let the market settle first. Once price action becomes more stable and your setup meets your trading criteria, you can gradually return to your normal risk approach.
After the session, review what happened.
Look at your entry, position size, stop placement, and exit. More importantly, ask whether you followed your plan.
A trade can have a poor result and still be well executed. A trade can also work out while being based on poor risk management. Reviewing the process helps you separate the two.
Imagine you are trading the E-mini Nasdaq futures contract around an FOMC decision.
You know that the announcement could create a sharp move, so instead of entering immediately, you mark the important support and resistance levels before the release.
The announcement comes out and Nasdaq futures move sharply higher. Rather than chasing the move, you wait. The initial reaction starts to slow, and price pulls back toward the level it broke above.
You now have more information. If that level holds and the market starts moving higher again, you have a clearer structure to work with.
Because volatility remains elevated, you use a smaller position size and give the trade enough room to move. Your focus is not on catching the first few seconds of the announcement. It is on finding a setup where the risk is clearly defined.
That difference in approach can help you stay more disciplined when trading around high-impact events.
Volatility is part of futures trading, especially around major economic releases and unexpected market events. You cannot control how much the market moves, but you can control how you respond to it.
For prop traders, the most important things are preparation, position sizing, clear levels, and patience. You do not have to trade every major release, and you do not have to catch the first move.
Sometimes the better trade comes after the market has shown its hand. Wait for structure, manage your risk, and make sure your decisions fit the rules of your account.
About the Author: Sam Saleh
Sam Saleh, a London-based trader, began his trading journey at 19 while studying Business at the University of Bedfordshire. With expertise in trading and a background in marketing, he now coaches at Hola Prime, where he develops educational content aimed at building trader confidence, consistency, and financial literacy.
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